Fizzling Sales in India for the Tata Nano, 'The People's Car'

By Adam Werbach

NEW DELHI -- Tata Motors, makers of the Nano, the world's cheapest car, is
announcing disappointing sales of the inexpensive four passenger car
designed for the emerging middle class of India. In November, just 509
Nanos were sold, despite brisk sales for more expensive cars. Mercedes
sells more than 500 cars a month in India.

After a brisk
launch, with nearly 10,000 units a month sold in June, July, and August,
sales plummeted when stories of the Nano catching on fire began to
circulate. Nano customer Ravindra Bhagat, whose Nano inexplicably
caught on fire, is quoted in the Economic Times of India, saying, "Though I received complete compensation for the car, I lost
faith in the product."

The target market for the Nano is
motorcyclists and others who don't have the means for a more expensive
car. Toyota has recently launched a low-cost car, the Etios sedan (three times
more expensive than the Nano) in its bid to grow its market share in
India from three percent to 10 percent. Other Indian car-makers are focusing on the
low-end of the car market as well. The Nano's low-cost innovations
include using 3 lug nuts to secure the wheels instead of 4, reduced use
of steel, a single wiper blade and side view mirror, and a trunk that's
only accessible from the inside.

Tata motors promises to
resolve the immolation issue and is aggressively building local sales
centers to help familiarize first time car-buyers with the car-driving
experience while creating financing mechanisms that are appropriate for
buyers with few assets.

When the Nano was launched, many
environmentalists publicly bemoaned the Nano's potential effect on the
Indian transportation sector. But while the Nano has not yet proven to
be the car which democratized driving, tens of millions of Indians will
undoubtedly be joining the car-driving West in the near future.